Mt 400 - Stakeholders, Metrics, and Quick Wins

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The second metric would be to establish a return policy with the supplier of product that does not sell as well as expected. It would be likely that only full cases could be returned but it would open a lot of overhead storage and reduce the markdown or elimination of merchandise at the store’s expense. This is significant because often during a large sale event there are items that do not sell leaving large quantities of inventory that simply does not sell. If suppliers do not want the merchandise returned, then a reimbursement of markdowns would have to be negotiated so that the store does not carry the full burden of the loss. An example would be receiving fifty cases of twin pack dish soap. The shelf product only holds single units and the twin pack must be on display. After the sale ends and there is a lot of the product left over, then it must be stored and put on a shelf “somewhere” to try and sell out the inventory. In addition, this can cause mix ups with the regular shelf inventory so that single units are not able to be ordered because it still shows the special twin packs available.

A third metric would be to hire and develop a fulltime stocking crew that is responsible to restock shelves and store overstock merchandise properly. When multiple teams are responsible for the inventory, a lot of differences will happen. Employees will make sure that the merchandise is stored in the proper area but night stocking crew won’t care and will just shove the merchandise anywhere they can make it fit. Often the employees must correct this and that takes time away from customer sales and service. Hiring a fulltime crew that is responsible for the entire stocking and restocking of merchandise will take the burden off the employees and make the stocking crew accountable for errors or improper stocking and labeling of the overstock. When employees who are responsible for customer sales and service are relieved of the burden of restocking inventory, then they can focus on taking care of the customer. With improved shelf stocking and focused customer service, sales of merchandise should increase and errors in inventory should decrease with better accountability and less people responsible.

Quick Wins:

According to Jeston and Nelis (2014 pg. 289) quick wins often come from front-line employees who execute the process. In this scenario, a quick win would be to hire a fulltime stocking crew. In the early stages this would not require a lot of people to provide a benefit. In fact, other personnel might be able to be reduced during certain store hours to be filled by the stocking crew. Introducing a small crew that is responsible for the re-stocking of merchandise can be used to show initial small steps of progress. Making sure that the crew is trained for the benefit of inventory management that would ensure that the product was available and when it needed to be re-ordered so out-of-stock items are reduced. The gains that can be quickly obtained will easily justify the additional staff.

Another quick win would be to assign one or two individuals who are totally responsible for the local store inventory. These two people will be required to make sure that the inventory is stocked correctly to optimize availability, inventory levels are adjusted for the sales in that store, and that there is a clear line of delegation and direction for the stocking crew. There will no longer be multiple supervisors or managers that are telling a variety of employees to do things in multiple different ways. The project will have clear direction with reduction of managers and make the process one that has accountability of two people plus the crew that performs the work.

My example is based in a large do-it-yourself chain. It was too common that the losses from the physical inventory alone is almost half a million dollars a year. This number does not include the daily markdowns or clearance items or even the merchandise that is given or thrown away. The chain is so large that this loss may not seem significant, but if it is thought of in terms of how much it could add to the bottom line to the company then I think more attention would be given to the process.

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Resource

Jeston, J., Nelis, J., 01/2014, Business Process Management, 3rd Edition, [VitalSource Bookshelf Online]. Retrieved from https://kaplan.vitalsource.com/#/books/9781136172984/